ABx: in rare company with a true Ionic Adsorption Clay REEs deposit

This article is a sponsored feature from Mining.com.au partner ABx Group Ltd. It is not financial advice. Talk to a registered financial expert before making investment decisions.

Not all junior exploration companies are created equal.

ABx Group (ASX:ABX) is positioned as a high-tech listed Australian company focused on delivering materials for a cleaner future.

Managing Director and CEO Dr Mark Cooksey tells Mining.com.au that as the first company to discover rare earths in Tasmania, ABx is uniquely positioned, and its strategy is clear.

“We’re trying to create projects, and so we are simultaneously progressing all the dimensions that you need to create a project. For rare earths, we all know you need to drill to establish a resource. But you also need to do the metallurgy work to determine how to process the ore and what it’s going to cost. 

“We’re trying to create projects, and so we are simultaneously progressing all the dimensions that you need to create a project”

You also need to be talking to potential customers to make sure you understand what they want. Basically, we know what is required to get a project up and running, and we’re doing all of those things right now and in the months ahead.”

A clear focus

ABx is focused on 3 significant businesses — the creation of an Ionic Adsorption Clay (IAC) rare earths project in northern Tasmania; the establishment of a plant to produce hydrogen fluoride and aluminium fluoride from recycled industrial waste via its 83% owned subsidiary, ALCORE; and mining and enhancing the value of bauxite resources for cement, aluminium, and fertilisers.

However, it is the rare earths project where ABx conducted further drilling of the Deep Leads IAC deposit from January to April that is generating interest. In a research report published in mid-May titled ‘Hiding in plain sight’, Corporate Connect initiated coverage on ABx.

The research report followed an updated REE Mineral Resource Estimate (MRE) in early May, which stands at more than 20 million tonnes at the Deep Leads – Rubble Mound deposit. Additionally, Deep Leads and Rubble Mound have the highest reported extractions from any clay-hosted REE prospect in Australia.

Cooksey says while many companies are pivoting to focus on REEs, not all clays are created equal. Rare earths in clays are an increasingly attractive and emerging exploration target, yet very few deposits globally are confirmed as having IAC rare earths mineralisation that is amenable to low-cost production methods.

“With rare earths, the growing demand means that there are numerous companies in Australia and overseas looking for them”

“With rare earths, the growing demand means that there are numerous companies in Australia and overseas looking for them. 

However, with our project in particular, the metallurgical work we’ve done demonstrates that our prospect may be the best in Australia. Our metallurgy results are significantly better than anyone else’s.”

Cooksey has more than 20 years’ experience with Rio Tinto (ASX:RIO) and CSIRO. He has worked closely with aluminium and other metal industries and has extensive experience in commercialising new technologies and processes.

He adds that true IAC deposits — where a large portion of rare earths can be extracted via desorption — are quite rare. Compared to hard rock deposits, they tend to be less capital-intensive. The other real advantage, he says, and one of the great features of the IAC deposits, is that they generally contain a higher proportion of dysprosium and terbium (Dy-Tb).

Rare earths from these deposits are essential, as they are components for electric vehicles, mobile phone batteries, computers, and medical imaging, among other applications. The International Energy Agency says demand for REEs — primarily for EV motors and wind turbines — is poised to grow 7% by 2040.

Dysprosium and terbium, in particular, are used in permanent magnets, which are the most valuable application of REEs, representing over 90% of the total value of rare earths consumption.

Ranking rare earths

How do such clay rare earths prospects rank in Australia?

As mentioned, the Deep Leads – Rubble Mound project in Tasmania now has a MRE at 21Mt. The MD says the substantial upgrade arises from 30 new holes — redrilled old bauxite holes that did not reach the REE horizon — and assays from incompletely assayed thick REE zones. As predicted, the thickness of the mineralised horizon increased by 10% to 7.7m and the grade increased by 15%. The grades and thickness of the more closely drilled indicated resources category have increased significantly.

As a result of all this, a new tenement application covering additional prospective ground has been submitted for government approval to support an exploration campaign to extend REE mineral resources a further 10-16km to the Wind Break REE discovery.

“The main issue for all prospects is metallurgy and its impact on cost”

“There are other larger clay-hosted REE resources, but resource size is not the most important parameter. The main issue for all prospects is metallurgy and its impact on cost. We think the projects with the best metallurgy will be the lowest on the cost curve and have the highest probability of success.” 

The interim mineral resource is based on 635 drillholes totalling 6,224m drilled and  2,893m assayed. This resource estimate includes deeper and significantly thicker resource zones than previously reported, and heavy permanent magnet REOs (Dy2O3 + Tb4O7) represent 4.2% of the TREO — the highest known proportion for any clay-hosted REE resource in Australia.

The prospect is located largely in cleared and uncleared forest plantations (soft and hard wood) and is frequently disturbed for lumber harvesting. The plantations are surrounded by farmland, and the Bass Highway runs east-to-west on the southern end of the prospect. Site access is easy and close to all modern amenities, though drilling access has sometimes been impeded by wet weather.

True IAC rare earths deposit

Cooksey notes that the rare earths market is quite new, but the sector is growing rapidly. There’s significant room for new entries, and ABx boasts a true IAC deposit.

Most of the world’s rare earths are typically sourced from hard-rock mines, which require large, expensive processing plants and hence often take a long time to reach production. However, rare earths can also be found in IAC deposits, although historically only in southern China.

The advantage of IAC deposits is that rare earths can be extracted from the clay through a simple desorption process, allowing for rapid and cost-effective project development.

Although clay-hosted REE deposits are fairly widespread, it appears that most of the rare earths in these deposits are still contained within minerals, making extraction expensive. True IAC deposits — where a large portion of rare earths can be extracted via desorption — are quite rare.

To assist in its strategy to bring its rare earths to market, ABx has engaged the Australian Nuclear Science and Technology Organisation (ANSTO) in Sydney to conduct all of its desorption testing.

Cooksey says the critical factor in appreciating the significance of recent results is that all desorption testing was conducted under the low-acid, low-cost processing conditions that defined successful extraction of true ionic adsorption clay REEs.

The tests were conducted at ‘standard’ desorption conditions of a weak solution of ammonium sulphate at pH4 and ambient temperatures and short desorption times (30 minutes). The MD adds that the low acid/ambient temperature desorption regime has significant implications for lowering the cost of extracting REE and therefore has major implications for project economics.

“The size of the resource is something that generates a lot of interest from a market point of view”

“Most companies pursuing IAC deposits recognise the importance of metallurgy and are conducting tests at ANSTO or other metallurgical laboratories. Often, tests are conducted under a variety of conditions. Almost always, sufficiently high extractions can be achieved if the leaching conditions are sufficiently acidic.

What is less understood is that the cost of achieving more acidic conditions in a commercial process is likely to be very high, such that the cost of reagents alone can be more than the value of the product. It would be extremely challenging to have a commercially viable project in this situation.

The size of the resource is something that generates a lot of interest from a market point of view. However, we (ABx) are focused on the whole project, so we’re thinking 2 steps ahead of just finding a great resource. We’re establishing the economics of the entire project.”

The image below shows the differences between different clay-hosted REE mineralisation phases and their extraction costs. The diagram illustrates the relationship of how the cost of leachate used per tonne of ore rises significantly as the proportion of Ionic Adsorption Clay REEs decreases.

Hard rock vs clay deposits

Hard rock rare earths deposits are often large-scale projects in terms of size and capital expenditure compared to their IAC counterparts.

In terms of IAC players in the market, Cooksey notes there are about “half a dozen focused ones in Australia” and a “whole smattering of others that are investigating if they have a prospective rare earths deposit”.

He adds that while there have been plenty of feasibility studies undertaken on hard rock deposits, the IAC market has less data to draw on. The evidence suggests that with the infrastructure associated with hard rock deposits, including the need for a refinery, the cost of developing an IAC project could be 10 times less.

For example, Lynas Rare Earths (ASX:LYC) has the world’s largest single rare earths processing facility in Malaysia, which cost $1 billion, making it the only scale producer of separated rare earths outside of China. As per its company reports, Lynas has also been racing to have a $575 million cracking and leaching plant at Kalgoorlie in Western Australia up and running by 1 July to avoid disruption.

Lynas mines rare earths near Laverton in Western Australia and would perform cracking and leaching at Kalgoorlie before sending the intermediate product to its Malaysia facilities for final-stage processing under revised licence conditions.

In terms of capex, comparatively early estimates suggest that IAC deposits — the category Deep Leads falls under — could cost in the order of $100 million to $200 million to develop, without the need for certain infrastructure such as a refinery.

Hiding in plain sight

As previously mentioned, in a research report published in May titled ‘Hiding in plain sight’, Corporate Connect initiated coverage on ABx Group with a valuation of $0.33 per share.

With a focus on the company’s IAC deposit, Corporate Connect reports the Deep Leads prospect in northern Tasmania is rapidly developing into a significant rare earths deposit, with all early metallurgical testing indicating that it is a true IAC deposit — “perhaps the only true IAC resource in Australia”.

The report notes that ABx has made quick work of upgrading the drilling program to delineate further resources, achieving a 500% increase to the MRE in under 5 months. The current MRE stands at 21Mt of inferred and indicated resource with a grade of 770ppm Total Rare Earth Oxides (TREO).

Initial testing by ANSTO of 70 bulk samples from the Deep Leads deposit gave an average extraction rate of 40% at pH4.

Cooksey reiterates, not all clays are created equal and “pH is king”.

Linkage between bauxite and IAC deposits

The initial discovery of IAC rare earths for ABx came in late 2020 when the company’s geologists explored the linkage between bauxite and IAC deposits. Initial testing for REE was initiated on ABx’s existing bauxite exploration samples from the Queensland Binjour deposit and the Rubble Mound Deposit in Tasmania. The results were announced to the market in early 2021.

Unlike many others exploring for IAC type deposits, ABx took early measures to validate the presence of IAC rare earths in the Deep Leads prospect. This was first announced to the market in May 2022. A subsequent announcement in February 2023 included results from 71 samples from across the Deep Leads – Rubble Mound resource. Of the 49 samples from Deep Leads, there was a 33% extraction of TREEs and 40% extraction of TREOs-CeO2. More than 70% of samples recorded greater than 25% extraction of TREEs-CeO2.

“Our strategy is to produce a mixed rare earth carbonate that can be sold to existing refineries to increase their production”

“Following these excellent early discoveries and our recent processing results, we’ve built significant momentum and will continue to conduct further exploration, including targeting new areas within our tenements with geological features prospective for additional rare earths.

Our strategy is to produce a mixed rare earth carbonate that can be sold to existing refineries to increase their production. Our carbonate will be high in heavy rare earths and low in radioactive elements. So, this will be attractive to many (prospective) customers.”

Market discussions with several potential customers endorse this strategy.

In part two of this series, following the recent results from samples from across the Deep Leads – Rubble Mound resource, the company details that ABx is using a modern technological approach to finding its place in the REEs market.

As such, it continues to work on no longer hiding in plain sight and instead emerging in rare company as a business with a true Ionic Adsorption Clay REEs deposit.

Write to Adam Orlando at Mining.com.au

Images: ABx Group Ltd & Corporate Connect
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Written By Adam Orlando
Mining.com.au Editor-in-Chief Adam Orlando has more than 20 years’ experience in the media having held senior roles at various publications, including as Asia-Pacific Sector Head (Mining) at global newswire Acuris (formerly Mergermarket). Orlando has worked in newsrooms around the world including Hong Kong, Singapore, London, and Sydney.